Oil price drop beneficial in long run: Iran Daily

Tehran, Dec 1, IRNA - Based on the agreement reached between Iran and the six world powers, no new sanctions will be imposed on Iran in the next seven months, noted the English-language paper 'Iran Daily' published Monday. With respect to the positive trend of nuclear talks, the government should make efforts to reduce the negative impacts of oil price drop, exercise proper management over forex revenues and provide people with more welfare facilities, suggested the paper in its Opinion column (pg 4). The falling oil price will lead to a decline in Iran’s foreign exchange revenues. But in the long run, this will benefit the country and improve economic growth, it noted adding that a drop in the world oil price will affect many markets and reduce the costs associated with production and transportation. Presently, Iran’s annual exports and imports which stand at $80b and $60b respectively, indicates that a major part of foreign exchange revenues earned by Iran is spent on imports. Falling oil prices will have a positive impact on oil importing countries and consequently strengthen the world economy, believes the paper, adding that a decline in oil price will help reduce dishonest economic practices in oil-rich countries. The oil price decline is also expected to cause the global prices of commodities to drop by 20 percent. In order to reduce the negative consequence of the oil price decline, the Iranian government should pay more attention to allocation of hard currency and imports. Currently, each ton of import into Iran costs $1,300 while the figure for non-oil export from Iran amounts to $400. This shows that the value of imports is threefold higher than that of export. With the decline in oil prices, the value of imports will also slide and this will benefit the country. In the year to March 2006, each ton of non-oil import to and export from the country were valued at $900 and $450 respectively. A rise in inflation, coupled with international sanctions imposed on Iran, has caused the value of imports to increase dramatically compared to exports./end